The stock market has taken quite a plunge this year. The S&P 500 has tumbled almost 20%, while the Nasdaq Composite has shed a third of its value. Some stocks are down even more. 

It's challenging to invest during stock market sell-offs like this since it seems as if another drop could happen at any time. However, if you're ready to start buying the dip, Brookfield Renewable (BEP -3.31%) (BEPC -3.49%) would be a wise place to begin. The leading global renewable energy producer has plunged more than 35% from its peak earlier this year. Because of that, it's looking like an incredible investment opportunity right now.

Growth at a great price

Brookfield Renewable has generated $1.54 in funds from operation (FFO) per share over the last 12 months. That's up about 8% from the prior-year period. Despite that growth, Brookfield Renewable has lost more than a third of its value this year and now trades at about 18 times FFO. 

That's a fantastic price for a company with Brookfield's growth prospects. It has four levers that should power more than 10% growth in FFO per share annually through at least 2027:

  • Inflation escalation: Brookfield sells 94% of the electricity it produces under long-term power purchase agreements (PPAs) with an average remaining term of 14 years. Most of these PPAs enable Brookfield to raise prices in step with inflation. They position the company to grow its FFO per share by 2% to 3% per year.
  • Margin enhancement: The company expects higher prices for clean power to benefit its uncontracted capacity and allow it to lock in higher rates as legacy contracts expire. These factors should boost its bottom line by 2% to 4% annually.
  • Development pipeline: Brookfield has 19 gigawatts of renewable energy projects under construction or in advanced stages. That's only a fraction of its more than 100-gigawatt pipeline of projects, which is more than four times its current operating capacity. The company estimates that development projects will grow its FFO per share by 3% to 5% per year. 
  • Mergers and acquisitions (M&A): The company has a long history of making accretive acquisitions through capital recycling by selling mature assets and reinvesting the proceeds into higher-returning opportunities. The company sees M&A adding up to 9% to its FFO each year.

That's up to 20% annual growth over the next few years, 8% of which Brookfield has already secured and funded. Its strong balance sheet will allow it to continue with development projects and making accretive acquisitions, giving it the fuel to deliver 10%-plus annual growth. Companies growing their profits that fast usually trade at 25 to 30 times earnings, making its current valuation of 18 times FFO seem incredibly cheap.

Meanwhile, Brookfield sees a $150 trillion investment opportunity for the renewable sector over the next 30 years. That should give it the power to continue growing at an attractive rate for decades to come. 

An attractive passive income stream

Brookfield's lower share price and valuation give it a much higher dividend yield at 4.6%. That's over two and a half times more than the 1.7% dividend yield on the S&P 500. 

That high-yielding payout is on a very sustainable foundation. Thanks to its long-term PPAs, Brookfield generates very stable cash flow. Meanwhile, it pays out a manageable portion of its steady income (77% so far in FFO).

While that's above its long-term target of 70%, the payout ratio should come down in the coming years as FFO grows faster than the dividend (Brookfield sees the payout rising at a 5% to 9% annual pace). That would enable the company to maintain its dividend growth streak. It has increased its payout by at least 5% for 11 straight years. 

Another stabilizing force for the dividend is Brookfield's fortresslike balance sheet. The company has investment-grade credit, significant liquidity, and predominantly long-term, fixed-rate debt. That gives it the flexibility to finance its continued expansion while also growing the dividend.

A smart choice

Brookfield Renewable looks like one of the wisest investments you can make these days. It's trading at a bargain price with an attractive dividend yield. Add in its growth prospects, and it seems likely that the company can generate total annual returns at or above the top end of its 12% to 15% long-term target range in the coming years.